Using Sunk Cost Fallacy to your advantage
Posted: Wed Jan 29, 2025 3:34 am
Do you want to invest within SMEs, for example in technology or even specifically the Metaverse? It's not a good idea to keep pushing through an investment at all costs. Notice something isn't working? Dare to pull the plug. The same goes for collaborations with partners. Sometimes it's better to quit halfway through than to keep going at it endlessly. Every extra day you keep going then costs more, when it wouldn't have been necessary. But as an entrepreneur, how do you avoid falling into the Sunk Cost Fallacy?
Focus on the short term
Rather choose a project that provides value in the short term, on which you can build, than one that will not provide value for several years, and may be obsolete in the meantime.
Look Ahead
'Sunk costs' are 'sunk,' so those amounts and hours incurred belarus mobile numbers list must be put behind you. Stay critical of opportunities, looking only ahead. Do not consider investments made earlier. Those costs have been paid and won't come back anyway. Sometimes it is better to cancel a new investment, even if it means that the previous investments were for nothing. A new investment in a project that no longer seems promising would only lead to higher costs in the future.
Are you working on a new IT environment, investing in a new machine or have employees been working on a new way of working for years? Keep going with that only if it's still a good idea. Don't be guided by what you've already done if you already know it's no longer the right way forward. Of course you take into account any opportunity costs when mapping out your company's finances. At the same time, it is important to only look ahead when making new investment decisions.
Verify a new idea
With a new idea, ask yourself: does it solve an existing problem in the marketplace?
Let potential customers make an initial investment in advance. Ask them to make a down payment, ask them to invest time, or get them to put effort into a new product or service. That way, verify that there is a real need.
Use a proof of concept to find out in practice if something works.
Focus on the short term
Rather choose a project that provides value in the short term, on which you can build, than one that will not provide value for several years, and may be obsolete in the meantime.
Look Ahead
'Sunk costs' are 'sunk,' so those amounts and hours incurred belarus mobile numbers list must be put behind you. Stay critical of opportunities, looking only ahead. Do not consider investments made earlier. Those costs have been paid and won't come back anyway. Sometimes it is better to cancel a new investment, even if it means that the previous investments were for nothing. A new investment in a project that no longer seems promising would only lead to higher costs in the future.
Are you working on a new IT environment, investing in a new machine or have employees been working on a new way of working for years? Keep going with that only if it's still a good idea. Don't be guided by what you've already done if you already know it's no longer the right way forward. Of course you take into account any opportunity costs when mapping out your company's finances. At the same time, it is important to only look ahead when making new investment decisions.
Verify a new idea
With a new idea, ask yourself: does it solve an existing problem in the marketplace?
Let potential customers make an initial investment in advance. Ask them to make a down payment, ask them to invest time, or get them to put effort into a new product or service. That way, verify that there is a real need.
Use a proof of concept to find out in practice if something works.